I wondered what Foster Hinshaw would get up to after he left Netezza, and now we know. He has set up the rather awkwardly named Dataupia, a data warehouse appliance with a difference. It is an important difference, as his appliance runs on Oracle rather than on a proprietary database like Netezza. It will also run on DB2 or SQL Server, for that matter. You just plug in MPP capable hardware to take advantage of the appliance. This is important, since having a proprietary database brings with it not only a certain amount of cost and new skills required, but also makes conservative corporate buyers nervous. If you are a Telco with really vast amounts of transaction data then this trade off may be worthwhile, as indeed can be seen in Netezza’s considerable success, but if you could get much of the benefit (and this is unclear since at this stage there are no comparative performance figures) while still running on your existing mainstream database, this would sooth the nerves of corporate CIO types who might otherwise try and block the introduction of a new database. Just as importantly, it allows existing data warehouse applications to be able to claim appliance like performance boosts. While the vast bulk of data warehouses today are custom built, this ought to be of interest to true data warehouse applications such as Kalido, which could presumably easily run on top of Dataupia’s appliance.

I think this is a very interesting development, assuming that the new product delivers on its promise. The market for an appliance capable of running on a mainstream database platform ought to be much broader than the set of applications that currently addressed by hardware appliances (or even software-based ones with their own database like Kognitio).

Tibco has made a serious foray into the business intelligence area via its announced acquisition of Spotfire this week. Spotfire has built up an excellent position in the visualisation space, starting in the pharmaceutical industry and then expanding into areas like upstream oil services. Based in Stockholm, it has successfully penetrated the US market, and its CEO Chriotopher Ahlberg has always impressed me. In a sea of failed visualisation vendors which never seem to catch on properly, Spotfire has a been a rare commercial success.

Spotfire’s revenues are not public, but are likely to be around USD 50M, so the USD 195M cash price paid for the company is a healthy one, reflecting Spotfire’s excellent momentum and differentiated technology. What will be interesting is to see whether Tibco is really the company that is best placed to exploit Spotfire’s technology. Tibco’s strong position in financial services will give Spotfire access to an attractive market. and while the companies’ technologies are broadly complementary, visualisation is a different animal than EAI, so it is less clear to me that the Tibco salesforce will be ideally placed to understand and successfully explain the benefits of Spotfire. The stock market seemed a little unconvinced as well, Tibco’s share price dipping on the announcement. Sensibly, Tibco is retaining the Spotfire brand and keeping the company as a separate division under Christopher Ahlberg.

Given the scale of the acquisition, this signals a serious move by Tibco into the broader BI market.

There is a good article about business ownership and MDM in DM News, from the rather unlikely pen of the marketing director of Siperian. Although any article written by a vendor should be the reading equivalent of held at a distance and handled with tongs, this piece actually has a lot of good sense in it. The key thesis is that MDM initiatives will not do well if owned by the CIO office or IT department, since success critically depends upon business engagement in the area of data ownership and governance. Now that MDM is developing momentum, some IT departments are embarking on large, enterprise-wide MDM initiatives. The hidden point of the article is that these projects are frequently being done using software from Oracle or SAP rather than an independent company like, well, Siperian, say, but you can forgive this subtly disguised message. The point is that without the business standing up and saying “Fred over there owns the notion of customer and will handle disputes over it between departments” and similarly for other master data, things will end in tears.

I was impressed recently by a client of mine who had already set up a cross-functional business team to do exactly this, and they could list not only the department which had been agreed to own various major master data elements (not just customer but asset, product, production facility, person etc) but actually had real people’s names attached to them i.e. it was not just wishful thinking. There were still plenty of issues with that project, but at least they had established the groundwork that would give them a chance of success. MDM initiatives which are driven by IT without this level of involvement to resolve boundary disputes are doomed to failure, whether the technology they use is from a mega vendor or an independent.

The most widely publicised piece that I wrote was “EII Dead on Arrival” back in July 2004. Metamatrix was the company that launched the term on the back of heavy funding from top end VCs, and I wrote previously about what seemed to me to be its almost inevitable struggles. There was some controversy over my article, which differed from the usual breathless press coverage which was associated with EII at the time (our industry does love a new trend and acronym, whatever the reality may be). I could never see how it could work outside a very limited set of reporting needs. Well, as they say on Red Dwarf: “smug mode”.

Gravity finally caught up with marketing hype this week, and Metamatrix will be bought by Red Hat and made into open source. It would have been interesting to know what the purchase price was, but Red Hat were keeping quiet about that. It is a fair bet that it was not a large sum of money. Kleiner Perkins won’t be chalking this up as one of their smarter bets.

Business Objects quarterly results reveal a continued split between the success of the enterprise performance management business relative to the stagnation of the core reporting business. License revenue overall was up 9% to USD 137M, but though “information and discovery and delivery” (traditional reporting) had a decent quarter the annual licence revenue for this part of this business is actually in decline. Rather disappointingly, management will no longer publish the split of revenue between the different businesses, presumably to avoid pesky analysts pointing out that there core business is in decline.
On the positive side, the continued diversification away from reporting e.g. with its Cartesis acquisition this week, means that Business Objects has been following a sensible strategy to avoid being caught up too badly by the core reporting malaise.

As with most large software companies, services revenue plays an increasing role, up 29% from a year ago. Business Objects has always done an excellent job of sales and marketing, and this is reflected in the 12 deals of USD 1 million in size (up from nine in the corresponding quarter a year ago). Financially, cash from operations was a healthy USD 107M, with overall cash at USD 675M.

The consolidation trend in the BI industry continued today with Business Objects (ticker symbol BOBJ) announcement of their intention to buy Cartesis, who are essentially a poor man’s Hyperion. One in four Fortune 500 companies use Cartesis for financial consolidation, budgeting and forecasting, and they had USD 125M in revenues, but reportedly had struggled with growth. The purchase price of USD 300M is less than two and a half times revenues, so is hardly what you would call a premium price (Hyperion went for 3.7 times revenues), though no doubt Apax, Partech and Advent (the VCs involved) will be grateful for an exit. This is not the first time Cartesis was bought (PWC bought Cartesis in 1999) but Business Objects is a more logical owner. Not only it is a software company, but the French history of Cartesis should make it an easy cultural fit for Business Objects. With Hyperion disappearing into the maw of Oracle then there were only so many opportunities out there in this space. Business Objects superior sales and marketing should be able to make more of Cartesis than had been done, and strategically this takes Business Objects up-market relative to its core reporting, which makes good sense.

Cognos’ 4th quarter revenues were USD 284M, up 12% year on year. The 4th quarter (ending February for Cognos) is the strongest one traditionally, but this run rate means that Cognos has the tantalising prospect of hitting USD 1 billion in revenue in the next financial year, clearly a major milestone.

The results were quite strong across the board, with more deals in excess of USD 1 million than the company has ever achieved (25 deals of this size) and revenue growing in each region (9% US, 16% Europe, 18% Asia Pacific) though the currency effects flatter the European figures (6% growth in local currency terms).

Of this revenue, USD 92M was in license revenue (USD 238M for the year in all) which has potential for improvement since migration to Cognos Version 8 is reportedly sluggish; perhaps only 10% of customers have migrated so far.

Overall the figures are solid rather than dazzling, as reflected in the share price performance, but still indicates that the BI industry is in generally healthy shape.

One thing I have been banging on about for a long time is how the MDM industry needs to move aways from its roots in CDI hubs and PIM if it is to address the needs of large enterprises on any scale. It seems obvious to me that if you end up with one specialised hub for each type of master data then you quickly descend into architectural anarchy. You have the various ERP systems, and are then going to add a customer hub, a product hub (different vendor) and then are going to notice that there are other important master data types that need managing, like financial data, assets, people data, brand information etc. Are hubs going to spring up to support each one? That way madness lies.

If we are to sort out master data properly then we need to isolate it in a master data repository, separate from a data warehouse and from ERP, which can manage and maintain all master data for the enterprise. This hub needs to be able to handle all data types and keep track of where versions of master data are, even if it is not the only place the master data physically resides. It at least needs to know where the copies of master data live, or else we are back in master data anarchy. I have been amazed at how few vendors (and customers) seem to have picked up on this obvious point. In their latest press release Siperian demonstrates that it, at least, has figured it out. The release itself contains the amusing claim that Siperian is the only MDM product that can do this: “the only operational hub capable of managing hundreds of different types of master data entities” which will come as news to, for example, BP Lubes, who are using Kalido MDM to manage 350 different types of master data and have been for three years. However, despite the over-egging on the marketing, at least Siperian seems to understand the problem, which is more than can be said for a lot of its competitors.

MDM vendor Purisma just announced something which seems to me a useful idea, and then got carried away in the marketing. MDM is a fairly broad landscape, and certainly trying to fix a company’s MDM problems is a major exercise involving not just clever software but also business processes and data quality. This may all seem too much for some customers, and so a smart move is to try to reduce things to manageable proportions by tackiling some more “bite sized” issues. One good example of this is dealing with Dun & Bradstreet data. Dun & Bradstreet is a company who provide information on credit risk, and as a by-product of this have the most robust set of company data around. Hence if you want to know who owns who, Dun & Bradstreet has a pretty definitive set of data, updated on a regular basis. Companies wanting to tackle procurement quickly find that managing their supplier data on a consistent basis is a recurring headache, so standardising around Dun & Bradstreet codes for companies is a good way to get a grip on who their suppliers really are. However, keeping things up to date when the new D&B data comes out is an issue.

Purisma have bundled up their MDM application with pre-built Dun & Bradstreet data capabilities, thus creating an application of MDM that is widely applicable and can create a foot in the door for their broader MDM capabilities. This is an astute move and one I am surprised that other MDM vendors have been so slow to pick up on. Picking off niche but meaningful business problems like this one is a way of bringing the benefits of MDM software to customers and creating a bridgehead within accounts that can be broadened without having to a sell a gigantic enterprise-wide MDM project. For me it is a pity that they have chosen to hype this by calling the application an “appliance”. I have written previously about the use of this term, which was cleverly introduced by Netezza to describe their data warehouse hardware/software solutiion. By using a term that once associates with a toaster or a fridge it conjures up in the mind something that can just be plugged in and immediately works, yet this is hardly the case with a data warehouse, from Netezza or anyone else. However it is at least correct that it involves a piece of hardware. To label an MDM application a “software appliance” is stretching the term ever thinner in my view. Tech companies seem unable to resist latching on to whatever term seems to be trendy, and this is an opportunistic label. The day that an enterprise can plug in a data-related application as easily as a toaster is the day that an awful lot of consultants will be out of business, and that will not be soon.

Anyway, this is a distraction from what I otherwise think is a clever move from Purisma, which has emerged under the leadership of Pete Daffern, an impressive character who used to work for Vitria and has done an excellent job of raising Purisma’s profile. Bringing MDM applications down to manageable business problems has to be a good idea, and I would expect others to follow.

Just in case you were in any doubt that the BI software industry is going through a relatively healthy phase, you may like to ponder the latest USD 46M purchase by Microstrategy. A niche technology company perhaps? Nope - a new private jet (a Bombardier Global Express XRS to be precise) for CEO Michael Saylor. This was reported recently in, amongst others, the Washington post:

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/04/AR2007020401106.html

Saylor has always been a charismatic but eccentric character e.g.:

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A2889-2002Jan5

but even so. This is a company that in December 2006 had USD 79M in cash (past tense). Its 2006 revenues were USD 313M (up from around USD 269M in 2005) and profits of nearly USD 71M (unaudited). This makes it an unusually profitable enterprise software company. However just what the board of directors were thinking when approving this particular purchase can only be a matter of speculation. Even though Saylor has a large stake in the company surely this is the kind of thing that boards of directors of public companies are supposed to be for? Perhaps it will encourage some blue sky thinking.

Still, pity their public relations manager. You have to be impressed with the creativity here: the plane “will facilitate more effective communication and more rapid coordination with its global employees, partners, and customer base” according to their SEC filing. Good one; this wins my “brassiest PR” prize of the week.